Crowdfunding became popular in the 19th century after a music band in the United Kingdom successfully went on a tour on the online donations of their teeming fans. Following the success of the said venture, Artistshare was floated in the year 2000 as the first crowdfunding website, and ever since, this method of raising funds for support has blossomed and metamorphosed into a billion-dollar industry.
What is Crowdfunding?
Many folks are familiar with this terminology, but not so many people are aware of its workability.
Crowdfunding is a method of raising funds through online platforms for causes such as projects, charities, research, bills, etc. People (Crowd) who are sympathetic to an appeal make donations to actualize the dreams of individuals or startups in crowdfunding.
Types of Crowdfunding:
There are three types of crowdfunding, depending on the incentive available for users of the platform, thus:
- Equity-Based Crowdfunding: In this crowdfunding, interested members (Crowd) invest in a growing but unregistered business to have a share in that company.
- Reward-Based Crowdfunding: This is also known as seed crowdfunding, where business owners solicit donations from individuals in exchange for a reward in the form of a product or service.
- Donation-based crowdfunding: This is the commonest type of crowdfunding in which a large group of people are asked to donate meager sums for a project.
This publication aims to ensure you do not just jump on a platform to crowdfund your project or product but to ensure you pitch your tent with the best platforms that offer crowdfunding services; we’d take a look at five of them.
Causes is an online-based platform that connects lawmakers to their constituencies so that the voices of individuals can be heard as well. The website is one of the largest globally because it has an excess of 180million users across 156 nations of the earth. For people looking to recruit a donor community for nonprofits, Causes is excellent because they run ads.
It is easier for people with Crowdfunding pages to receive pledges, donations, run campaigns, and share information with potential donors on Causes.
Causes also have a social networking menu where people who have common interests across human rights, advocacy, environment, politics, and so on connect. While this platform is open all and sundry, individuals and organizations can raise funds for the ideas and projects that they nurture.
Patreon rewards those in the creative industry like YouTubers, Freelancers, Bloggers, etc. Their payment method is based on subscription – fans offer creators they love a monthly fee to gain exclusive access to their content or their journey on the platform.
Therefore, both fans and creators win on Patreon knowing value is received for the product paid for, and creators are left motivated to do even better. However, this platform’s downside is that pledgers have the right to cancel the amount pledged(subscription) if content is not produced. This service pays more to creatives who regularly share their work on their platforms.
Patreon has up to 6million active patrons, 200,00 + creators, and they have paid out a staggering $2 b+ to creators.
Gofundme is the most popular crowdfunding site on the internet, where individuals, teams, organizations, and nonprofits run campaigns to raise funds. They take up to 2.9% as a processing fee and 30 cents on every donation. All monies raised are delivered to the exact cause; I mean, everything presented is given back to the champion of the cause. Also, they do not charge any fee for people living in the United States.
GoFundMe has a track record of successfully funding huge projects like the Las Vegas Victim Funds ($11.8m). They have fully funded many charitable causes like paying medical bills and school fees for individuals. However, it is interesting that Startups suffer on the site as the success rate is pecked at one in 10.
CircleUp is a crowdfunding website for entrepreneurs. They provide business owners with the resources and capital to grow and compete. They have raised $390 million for over 250 startup businesses and are still doing more.
This platform also connects individuals to accredited investors who can take a look at startups and help scale them with funds with special lines of credit. They also make strategies for businesses that outgrow their competitors in the market.
LendingClub was established in 2007, and they have since helped over 3 million users. They enable users to pay less when they borrow, $40,000 for personal loans and up to $500,000 for business loans, and this platform is strictly for Americans in America.
One of the most notable advantages of LendingClub is that users do not require business plans to secure funding. However, you must have spent at least one year in business with a return of about $50,000 in annual sales to be qualified for funding on here.